3 Answers
3

Have you looked into using Blender? Blender is the defacto standard open source 3D modeling program with a huge community and tons of tutorials out on the web. Here is a tuturial about creating a cityscape in Blender.

Look at the Virtual Terrain Project (vterrain.org). This is designed to deal with large and complex terrain models, and is fully open source. You might still want to use Blender for custom buildings, but VTP has procedural building modeling built in.